• JJ Ament, president and CEO, Denver Metro Chamber
• Roland Peña, senior vice president of global investment and innovation, Opportunity Austin
• Eloisa Klementich, president and CEO, Invest Atlanta
• Segun Idowu, chief of economic opportunity and inclusion, City of Boston

Contrary to their name, secondary cities are some of the hottest destinations going. It is the case for travellers, workers and investors. Their magic is in striking a balance between the opportunities and vibrancy of metropolises, and the lifestyle and affordability of a smaller community.

Perhaps nowhere has the rise of secondary cities been stronger than the US. Its sheer size — geographically, economically and in terms of population — has created significant scope for mid-sized destinations to make a name for themselves and attract the people, foreign direct investment (FDI) and attention once reserved for the country’s coastal megacities. 

There are signs they are becoming a victim of their own success, with rising costs and housing challenges. But, as fDi found out, several of these cities are fighting to manage these challenges and ensure their locations continue to expand without losing their local advantages. 

In this latest IPA Roundtable, fDi spoke with economic leaders in four so-called ‘secondary FDI cities’. These are cities with a population of less than one million and have attracted between 1% and 2% of announced FDI, and investment from other US states, in the five years to September 2024 (according to fDi Markets). 

The participants are scattered across the country, from the Denver Metro Chamber in the centre and Opportunity Austin in the south, to Invest Atlanta and the Economic Opportunity and Inclusion division of the City of Boston. It turns out these cities’ investment rise is often underpinned by great connectivity and landmark infrastructure or regenerations. But each is finding its own path to success.

Q: For foreign investors not familiar with your city, what are its three biggest or most dynamic industries?

Eloisa Klementich: Definitely fintech and financial services. Atlanta is known as Transaction Alley, because we have the headquarters of financial services firms like NCR, Fiserv and Global Payments which means 70% of all US financial transactions pass through Atlanta. The next is transportation and logistics, with Hartsfield-Jackson Atlanta being the busiest airport on the planet. Lastly there’s the film industry, which is seeing continual growth helped by industry-specific tax credits.

JJ Ament: The fastest growing industries are IT and software, financial services, and aviation and aerospace. We are a global leader in aviation and aerospace, and home to the US Air Force Academy and US Space Command. In the US, Colorado has the second-largest private aerospace economy, behind only California.

Roland Peña: I’ll highlight three industries that are hot now. In life sciences, we have about 300 companies that employ 22,000 people, and many of them have arrived or been developed over the past few years. In semiconductors, Austin has a long history and Samsung this year announced an expansion of its local chip production to $40bn — one of the largest greenfield FDI projects in the US. The third is aerospace and defence. In 2018, the Army Futures Command opened its new headquarters in Austin, which has the sole purpose of working on next-generation technologies to help national security defence. Since then, defence has really taken off. 

Segun Idowu: The major one is life sciences. With the presence of the likes of Eli Lilly, Vertex Pharmaceuticals and Moderna, the city continues to drive innovation and be the global hub for the industry. The other two we are growing and which are attracting a lot of investment are climate tech and artificial intelligence (AI). The Massachusetts governor’s most recent economic development bill (which the state legislature passed on 14 November) sets aside $1bn for climate tech and another $100m just to get started in the AI industry.

Q: As an investment destination, what advantages does your city have over larger US cities?

RP: One is affordability, both cost of living and cost of doing business. Our state and local taxes per capita are 24% lower than the national average. Plus, we are a young population, with a median age of around 36, and have a strong base of tech talent. You could say Austin is the sweet spot: it’s a tier-two city competing at a high level against, and with the benefits of, major metros in the US.

SI: One advantage is the fact our state and local government are so tied together, so collaborative and invested in a deep partnership. We also hear from start-ups how close our innovation ecosystem is compared to elsewhere in the country. Not just in proximity, but if you want to start your company this is where you’re going to find investors. It’s where you're going to find a friend in government to help you find a space to test your product.

EK: Atlanta has one of the lowest costs of doing business among major US metro areas (according to Moody’s). So it’s not as expensive to operate here as if you were in San Francisco, LA, New York, DC or Seattle. Our low cost of living, much of which is driven by the state’s low individual income tax rate of 5.49%, attracts a workforce that can actually afford to live here and have a good quality of life — which is really what the younger generation is looking for when deciding where to live and work. Also, the accessibility of Hartsfield–Jackson Atlanta means if you have a meeting in New York or Austin, you can catch a plane early morning and come back that night. 

JJA: Denver is about 350 miles west of the geographic centre of the US. Time zone-wise, we can do business with Europe in the morning and Asia in the afternoon. And with Denver International Airport being the third-busiest in the US, we can fly to the east coast and the west coast and back in a day. The criticism of Denver would be that it’s isolated — it’s the only major business centre in the Rocky Mountains region. But that distance has gotten much smaller because of that airport connectivity. And the natural benefit of living adjacent to the Rocky Mountains is that in less than an hour you can be on world-class ski slopes. I’ve travelled the world, and I think we put together the business opportunity and the quality of life just about as good or better than any place I’ve been.

Q: How has your city’s population changed over the past decade, and has this tarnished its investment credentials?

RP: Austin has among the fastest-growing metros in the country for the past 13 years. But the rate has tapered off. Pre-pandemic, we averaged 156 people relocating to Austin on a daily basis. That peaked at 190 people a day during the pandemic, but is now down to 143 people daily. The huge influx during the pandemic created a housing shortage at that time, but we’ve worked really hard with the real-estate community, city and region to improve that supply by adding 40,000 housing units. 

SI: During the pandemic, we saw some folks move out of the city, with the rise of work-from-home. It meant that neighbourhoods and their small businesses thrived, and that’s been maintained. Like all major cities, we are focused on what to do with our downtown and the future of its empty office buildings, but we’re continuing to see folks choose Boston to live. By 2050 we’re going to be near the mayor’s goal of 800,000 folks in the city. The increase in population has put some pressure on the housing market, but our mayor and governor have invested heavily in creating more affordable housing.

EK: Our metro area population grew some 13% from 2014 to 2023, so people are attracted to the Atlanta region as a place to live. During that same period we saw jobs increase by 25%. The median cost of a house has increased in Atlanta to about $385,000 and rents have increased too, but we have a mayor and city council committed to affordable housing, selling a $100m bond to invest in affordable housing. It’s also looking at changing zoning laws. The mayor has a goal of 20,000 units in eight years. We’re four years in and we’re at about 10,000 units of affordable housing.

JJA: Denver was among the top 10 US cities people moved to during the pandemic (according to Bloomberg research). That said, we’re growing now about half as fast as we did during the 1990s. We attribute that primarily to costs. The median home price in Denver is around $600,000, so we need to spend some more attention on the delivery of affordable housing. The cost of living is also about 8.2% higher than the national average. This is a place that you are paying for the lifestyle and the vibrancy of the community. Relative to the coastal competitors of New York, Boston and San Francisco, it is still good value though.

Q: Are there recent examples of your city attracting business usually destined for larger US cities? 

RP: The majority of companies that move to Austin are from the east and west coast, so we are competing more against the Sun Belt cities that have low cost of doing business and business-friendly policies. For example, there’s Tesla’s gigafactory and its headquarters’ relocation from California to Austin. In life sciences, BillionToOne is a molecular diagnostics firm that recently announced its expansion from the Bay Area to Austin, with a 220,000 square foot campus.

SI: Last year, Lego chose Boston for their Americas head office location. Meanwhile, toy company Hasbro is considering moving its headquarters from Rhode Island, and they’re deciding whether to move to Boston.

EK: Atlanta aims to be a top-five tech hub in the country, and we recently secured the $25m innovation centre of PrizePicks in midtown. Another innovation centre is being opened by [food and agriculture group] Cargill, which is another innovation centre with around 480 jobs that potentially would have gone to other hubs.

JJA: Philip Morris International just brought a $500m advanced manufacturing facility to the Denver area. UK company bet365 also recently announced its North American headquarters with plans to hire 1000 employees. Safran is a French company which makes advanced satellite propulsion systems and they are building a manufacturing facility here. In software and IT, we are also seeing firms headquartered in Silicon Valley putting some of their largest employment centres here. For example, payroll company Gusto has its biggest employment centre here. Fitness app Strava also has a large number of employees here. 

Q: Which landmark investments or projects helped put your city on the investment map? 

SI: The seaport redevelopment is the city’s biggest project outside of the Big Dig, which put a major highway under the city centre. The private investment in the seaport area, as a result, is allowing for another monumental project to be kicked off: the Dorchester Bay City. This will be a decades-long project that’s essentially building another seaport, and is spurred by private investment and doubling down on Boston’s future as a hub for emerging and tech industries.

RP: Tesla’s presence has led to a massive influx of suppliers and autonomous-vehicle projects. They wrote the script and proved that automotive can be done in the Austin metro [area]. We call it the Tesla effect. Similarly, we’ve seen an influx of defence companies — including BAE’s 390,000 square foot campus in 2022 — which are primarily attracted to Austin because of the Army Futures Command. 

EK: The Beltline is a 22 mile loop of trails and parks that circles the city, connecting 45 neighbourhoods. This connectivity is important, and you’re seeing companies move next to the Beltline. It has become like Atlanta’s beachfront property in the sense that it really is driving investment and interest. And for the first time, we have a line of sight to completing the project by 2026 when Atlanta co-hosts the Fifa World Cup. We also have six landmark projects underway that represent $12bn of investment within a one-mile radius and are going to fundamentally change our downtown. This includes the Stitch, which will create a park over a highway, and the Atlanta Tech Village in South Downtown. 

JJA: The US Space Command, Air Force Academy and Colorado having 30 federally-funded scientific research laboratories is significant. In the central business district, we’re completing a $150m-plus remodel of our main street, 16th street, and we have a unique opportunity thanks to the redevelopment approval of an amusement park and set of parking lots adjacent to the downtown area. So for the next 20–30 years, we have the potential to develop almost a second downtown right next to the one we have now. Very few places have that level of greenfield development available so centrally.

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This article first appeared in the December 2024/January 2025 print edition of fDi Intelligence